Across America the wind is shifting towards a cleaner energy future as more states and utilities every year set aggressive targets to reduce the carbon intensity of our electric grid. Much of the debate over meeting strong clean energy targets has focused on the feasibility of operating the grid under high penetrations of renewable generation. A fascinating report recently published by the University of California Berkeley’s Goldman School of Public Policy argues that transitioning the U.S. electricity sector to 90% clean energy by 2035 is operationally feasible, and, even more striking, possible without raising customer’s bills from today’s levels. But achieving this outcome, the report acknowledges, will require “strong policies” to enhance large-scale adoption of renewable energy.
So, just how strong are the policies needed to meet the goal of 90% clean energy by 2035?
Understanding the scale of clean energy investment
One way to measure the size of a power plant is by the maximum output the plant can physically produce at a single point in time. This maximum output is called a power plant’s capacity and is measured in a unit called a gigawatt. To visualize what this means for those of us who are not power engineers, the Department of Energy has put together several helpful comparisons highlighting that a gigawatt is equal to the maximum output of 3.125 million solar photovoltaic panels, the amount of energy need to light 110 million LED lightbulbs, or the horsepower from 2,000 Chevy Corvette Z06s.
According to the Berkeley report, to reach 90% clean energy by 2035 the deployment of new clean energy and storage capacity in the United States would need to average 75 gigawatts each year, reaching over 1,200 gigawatts in total by 2035. Over the last 15 years (2005-2019), the United States has added, on average, approximately 23 gigawatts of new power generating capacity per year—or 338 gigawatts in total. This means we will need to build more than three times the amount of power plant capacity per year than we have in the recent past. Accounting for real-world inefficiencies, it is possible that the clean energy capacity needed could be even higher.
The last time the U.S. developed new power plants at this scale was briefly in the early 2000s when Wall Street was excited about the promise of electric deregulation. As a result, significant amounts of private capital flowed into the U.S. power sector with development of new power plants peaking in 2002 at approximately 70 gigawatts of new capacity.
A massive expansion of new clean energy capacity, of course, would require significant capital investment: over $100 billion per year, according to the Berkeley report, for a total of $1.7 trillion.
The American Council on Renewable Energy has evaluated the amount of capital invested in U.S. renewable energy to date, allowing us to understand the scale of the investment challenge. Private sector investment in U.S. renewable energy and enabling grid technology reached its highest level to date in 2019 at $68.4 billion, according to the Council’s July report. That’s 21% higher than the amount invested in 2018. The primary driver of the increase, the report adds, was a “rush to qualify for the federal solar and wind tax credits” before an expected phase down of tax credits that would lower returns for power plant developers.
This means to reach a goal of 90% clean energy in the electricity sector by 2035, we need to increase our annual investment by 45% compared to the year with the highest clean energy investment to date—a year when investment was partially driven by a rush to build new renewables before tax credits expired.
There is no one size fits all solution
Filling the gap in private investment and sustaining it over time will not be an easy task. The Berkeley report’s equally engaging companion study, by Energy Innovation, focuses on potential policy solutions. It proposes a wide range of policy options that could bridge the gap on missing investment. In short, the study argues, it will require bold federal action, with strong complementary legislative and regulatory movement at the state and local levels to meet 90% clean energy by 2035.
If we as a nation choose to radically shift towards a cleaner energy future, appropriately incentivizing private investment to achieve these ends will be paramount. However, we must also remember that the U.S. electricity grid is not a monolithic entity. Depending on how one draws the boundaries, there are approximately 15 distinct electricity regions across the United States, each with its own unique market rules, structures, and guiding principles. This is an artifact of how electric deregulation has progressed over the last 20 years with the Northeast, Mid-Atlantic, and Texas generally being the most deregulated and the states in the Southeast and much of the Midwest and West generally being more vertically integrated.
Solutions that work towards reaching a clean energy economy in our deregulated competitive energy markets, where the majority of market participants remain committed to the free market, are unlikely to be the same strategies within our vertically integrated regions where utilities retain monopoly power. As we hear renewed calls for strengthening clean energy investment across the nation this election season, we must remember that for federal clean energy policies to be successful they will have to acknowledge and account for regional electricity market differences across the country.
via Forbes.com: Energy News https://ift.tt/35kfx70